The war in the Middle East has raised concerns about energy and fertiliser supplies. How does it affect agriculture in Bangladesh?

The war has impacted the supply of all types of fuel. When diesel prices rise, it creates a chain reaction across the agricultural sector. The cost of irrigation and fertilisation increases, directly raising production costs. This contributes to inflation, which is already close to double digits. Ultimately, this affects everyone’s livelihood, especially the poor, who spend a large share of their income on food. When people spend most of their income on staple foods like rice, they cannot afford nutritious items.

The government has yet to increase fuel prices, except for jet fuel, though global prices have gone up. What would be your suggestion?

The duration of the war is an important factor. In the short term, I would suggest not increasing prices for agriculture-related fuels like diesel because the impact on the poor would be significant. If the war continues, the government will need to maintain subsidies, creating pressure on public finances. Therefore, it is crucial that we strengthen our domestic production capacity of both fertiliser and energy. We should explore our own resources, such as gas in the Bay of Bengal, and diversify import sources. We should also diversify our import basket.

There are also issues of efficiency in irrigation and fertiliser use in Bangladesh. How can farmers improve such practices? Farmers often use more water than necessary through flood irrigation. But research shows that keeping fields continuously flooded is unnecessary. Smart card systems, introduced by the Barind Multipurpose Development Authority in the Barind tract, are helping address this issue. Under the traditional flat-rate system, farmers paid a fixed amount for unlimited water, so they had no incentive to conserve it. With usage-based pricing, farmers use only the amount of water they actually need. If the loopholes are addressed and the system is expanded further, it will be beneficial. At the same time, the government is trying to expand climate-smart irrigation methods such as Alternate Wetting and Drying for paddy cultivation, which improves the efficiency of both water and fertiliser use.

This system also has implications for groundwater levels and diesel-dependent irrigation.

Exactly. When more water is extracted, more diesel is required, especially as groundwater levels fall. In places like Rajshahi and Rangpur, it is already difficult to lift water using tube wells. Even with submersible pumps, it now takes much longer to fill tanks than before. Since we are currently in the Boro season, the situation may worsen in the coming weeks. There have already been reports of water crises, particularly in Rajshahi. If we relate this to the Middle East war, the situation could worsen further because irrigation in Bangladesh is largely diesel-dependent, making it highly sensitive to global fuel price fluctuations.

The new government has planned to introduce Farmers’ Cards. What is your view on this?

It can bring all subsidies under a formal “one-stop” system. Currently, subsidy distribution suffers from targeting errors—either deserving farmers are excluded or undeserving individuals receive benefits. Proper targeting and timely delivery will make the system more effective.

You have researched agricultural supply chains. What are the major issues here?

Sometimes there is surplus production, but products are not available in the market. Many blame middlemen, but our research shows they are necessary. The problem is not their existence but inefficiency. Direct selling without intermediaries is often not cost-effective due to the lack of economies of scale. What we need is a competitive market structure. However, that is largely absent. Perfect competition requires many buyers and sellers, but in reality, a few large players dominate the market. This leads to collusion and prevents efficient price formation. In such situations, government intervention becomes necessary. However, in Bangladesh, by the time action is taken, prices have already spiked or harvest seasons have passed, harming producers. Efficient planning is therefore crucial.

How can this planning be made more efficient?

A major problem is the lack of reliable data on demand and supply. Without accurate statistics, we cannot determine deficits or make informed decisions. We need an early warning system that provides production and demand estimates before harvest seasons so that timely decisions can be taken. Such a system would improve market efficiency and reduce volatility.

Small-scale farmers often complain about difficulties in accessing loans. Many depend on informal lenders charging high interest.

Banks often have funds available to lend, but farmers avoid them due to complex procedures. By the time loans are approved, the cropping season may already be over. Formal loans involve high transaction costs, collateral requirements, and often insufficient loan amounts. Repayment schedules also do not align with agricultural cycles, which include a gestation period. For example, rice farming requires at least three months before returns, while cattle fattening may take six months. However, many lenders demand immediate repayments, which is unrealistic. Although some NGOs have introduced flexible loan structures, most still do not align with agricultural cycles. In contrast, informal lending provides quick access through personal networks. Therefore, policies must align financial services with farming cycles.

As Bangladesh is an agrarian country, shouldn’t our industries also develop surrounding agriculture?

Yes, certainly. While we can develop other industries, we have a natural comparative advantage in agro-based industries. There is strong potential for such industries in economic zones, but they have not received sufficient emphasis. Exporting processed and value-added products instead of raw materials can generate higher returns. For instance, dried fish has strong export potential, but food safety and nutrition standards must be ensured to access global markets. There is also significant potential in livestock and fruits if efficient processing and packaging industries are developed. Our export basket can become more diversified through these efforts. I strongly suggest investing in cold chains and cold storage for perishable products. Public-private partnerships can play a key role. Additionally, ICT and AI can help attract youth to agriculture and support domestic production of import-dependent items such as spices.

What level of priority should agriculture receive from policymakers, given the importance of food security?

Agriculture should receive the highest priority. Despite its importance, no dedicated commission has been formed for the sector during the tenure of the interim government. Although total allocations may increase, agriculture’s share in the budget relative to GDP is declining. Given global uncertainty and Bangladesh’s dependence on imports, strengthening agriculture is essential for ensuring long-term food security and economic stability.

What would be your concluding remarks?

Agriculture is the backbone of the country. From the shocks during the Covid pandemic to the ones from the Russia-Ukraine war, agriculture has sustained us. We often say our agriculture is resilient, but it is also vulnerable to both external and internal shocks. Over the last 10 to 15 years, agriculture has supported the economy at several critical moments compared to other sectors. Had it performed poorly during Covid and the early phase of the Russia-Ukraine war, the country’s situation would have been far worse. However, the sector still faces vulnerabilities, and we are not fully utilising its potential. We must take deliberate steps to harness it more effectively and ensure its long-term sustainability.